In the Philippines, the right to security of tenure is a constitutionally guaranteed right. Under the Labor Code, no employee shall be terminated except for a just or authorized cause and after the observance of due process. When an employer fails to comply with these substantive and procedural requirements, the dismissal is deemed illegal, triggering specific legal remedies for the aggrieved worker.

1. The Two-Fold Requirement for Valid Dismissal

For a termination to be valid, the employer must prove two elements:

Substantive Due Process: The termination must be based on Just Causes (e.g., serious misconduct, willful disobedience, gross and habitual neglect of duty) under Article 297, or Authorized Causes (e.g., redundancy, retrenchment, or closure of business) under Article 298.
Procedural Due Process: The employer must follow the "Two-Notice Rule."

2. The Two-Notice Rule (Procedural Due Process)

In cases of dismissal based on just causes, the law requires:

First Written Notice: Detailing the specific grounds for termination and giving the employee an opportunity to explain their side (usually within at least 5 calendar days).
Hearing/Conference: A physical or formal opportunity for the employee to present evidence or rebut the accusations.
Second Written Notice: A notice of the decision indicating that all circumstances involving the charge have been considered and the grounds to justify severance have been established.

For authorized causes, a 30-day prior written notice must be served to both the employee and the Department of Labor and Employment (DOLE).

3. Primary Legal Remedies

When a dismissal is declared illegal by the Labor Arbiter (National Labor Relations Commission), the following remedies are typically awarded:

Full Backwages

The employee is entitled to backwages computed from the time compensation was withheld up to the time of actual reinstatement. This includes basic salary, allowances, and the monetary equivalent of other benefits (like 13th-month pay and service incentive leaves).

Reinstatement

The employer is mandated to restore the employee to their former position without loss of seniority rights.

Actual Reinstatement: The employee returns to work.
Payroll Reinstatement: The employee is restored to the payroll but not required to physically report to work (common in strained relations).

Separation Pay (In Lieu of Reinstatement)

If reinstatement is no longer feasible due to "strained relations" between the parties, or if the position no longer exists, the court may award separation pay. This is usually computed at one month's salary for every year of service, a fraction of at least six months being considered as one whole year.

4. Moral and Exemplary Damages

These are not automatic. They are awarded only if the dismissal was attended by bad faith, fraud, or was done in a manner oppressive to labor or contrary to morals and public policy.

Moral Damages: For mental anguish and serious anxiety.
Exemplary Damages: To set an example or correction for the public good.

5. Attorney's Fees

In cases of unlawful withholding of wages or illegal dismissal, the employee may be awarded attorney's fees equivalent to 10% of the total monetary award.

6. The Agabon and Serrano Doctrines (Procedural Lapses)

A critical distinction exists when there is a Just Cause but the employer failed to follow Procedural Due Process:

The Dismissal is Upheld: The employee is not reinstated and does not receive backwages because the reason for firing was valid.
Nominal Damages: However, the employer is sanctioned for the procedural lapse. Under the Agabon vs. NLRC ruling, the employer must pay nominal damages (typically ₱30,000 for just causes and ₱50,000 for authorized causes) as a penalty for violating the employee's right to statutory due process.

7. Where to File

The aggrieved employee must file a formal complaint for Illegal Dismissal with the Regional Arbitration Branch of the National Labor Relations Commission (NLRC) having jurisdiction over the workplace. Before formal litigation, the parties undergo SENA (Single Entry Approach), a mandatory conciliation-mediation process aimed at reaching an amicable settlement.